Torunlar REIC Annual Report 2010 / 002 INDEX
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Torunlar REIC Annual Report 2010 / 002 INDEX INDEX 004 - MESSAGE FROM THE CHAIRMAN 007 - CORPORATE PROFILE > Our vision > Our mission > Our strategies > Our values > Long - established history in real estate development > Proven performance in asset management > Excellent growth potential supported by strong financial assets 014 - AGENDA OF GENERAL ASSEMBLY MEETING 016 - FINANCIAL HIGHLIGHTS 017 - CORPORATE GOVERNANCE > Board of Directors > Senior Management > Auditors > Capital Structure > Shareholding and Capital Structure Post-IPO > Financial Structure > Position of Company in the Real Estate Investment Company Sector 027 - SECTORAL ASSESSMENTS > Real Estate Investment Company Sector > Construction Sector > Office Sector > Housing Sector > Retail Sector 037 - ASSETS OF TORUNLAR REIC 038 - Operational Assets 061 - Projects Istanbul Istanbul > Torium Shopping Center > Mall of İstanbul > Nishistanbul > Ali Sami Yen Project Ankara > Torun Tower > Ankamall Bursa Bursa > Korupark Terrace > Korupark Shopping Center Samsun > Korupark Residences > Bulvar Samsun Shopping Center > Zafer Plaza Shopping Center Antalya > Deepo Outlet Center Muğla > Netsel Marina 003 INDEX 075 - FINANCIAL RESULTS AND EVALUATION 081 - SOCIAL RESPONSIBILITY PROJECTS 085 - INDEPENDENT AUDITOR’S REPORT 159 - CORPORATE GOVERNANCE ALIGNMENT REPORT Torunlar REIC Annual Report 2010 / 004 MESSAGE FROM THE CHAIRMAN MESSAGE FROM THE CHAIRMAN “2011 will be another year of investments for Torunlar REIC.” Dear Shareholders, The financial and economic measures taken in many countries in 2010 to mitigate the impact of the global economic crisis have started to take their effect. Following a 0.6% contraction in 2009, the global economy managed a 5% growth during the past year. However, it is believed that the sustainability of this growth will be possible through permanent arrangements in financial markets. Turkey: The Shining Star of the World With the smoke dissipating on the global financial crisis in 2010, all eyes were once again on Turkey, whose economy grew by 8.9%. This performance, which defied expectations, placed Turkey among top countries within developing countries. To the BRIC zone composed of Brazil, Russia, India, China were added CIVETS countries (Columbia, Indonesia, Vietnam, Egypt, South Africa) including Turkey, altogether Aziz TORUN becoming the locomotive of the world economy. The growth trend in the Turkish Chairman of the Board and CEO economy has not only increased the confidence in the market, but also attracted the interest of foreign investors. The continuous growth in the Turkish economy has been evident in the real estate sector in which Torunlar REIC operates. Construction and retail were the fastest growing sectors in 2010, with growth rates of 17.1% and 15.6% respectively. This strong growth trend is likely to continue in 2011, and housing, office, shopping center and hotel investments are also expected to meet the positive expectations in the business community. Home purchases in particular are likely to demonstrate an upward trend in 2011. According to the Central Bank’s consumer confidence index, consumers’ home –buying intention reached the highest level after the crisis with 100.42 points. Needless to say, this trend will create a major movement in the housing sector in 2011. In the same manner, retail is expected to continue its growth trend as a major locomotive sector. Turkey, especially Istanbul, is on its way to becoming one of the major centers in the areas of tourism, healthcare, economy and finance for European, Middle Eastern, North Africa and Former Soviet Bloc countries. Advancements in these areas have also given rise to demand and growth beyond expectations in the hotel, retail and office sectors. 2011 will be a year of investments for Torunlar REIC We consider 2010 a turning point for Torunlar REIC for several reasons. We successfully completed our initial public offering process, which is one of the most significant indicators of our company’s future-oriented vision. We started trading our shares in the Istanbul Stock Exchange as of October 21st, 2010. Closing 2010 005 MESSAGE FROM THE CHAIRMAN with net assets of 2.5 billion TL, portfolio value of 3.1 billion TL and market value of 1.4 billion TL, Torunlar REIC has the honor and responsibility of being the Real Estate Investment Company with the second highest value currently traded in the Istanbul Stock Exchange. Being one of the top 50 most valuable companies in the market with its current market value, Torunlar REIC started to be traded in the Istanbul Stock Exchange top 100 starting on April 1st, 2011. With the public offering of Torunlar REIC, the market value of other Real Estate Investment Companies traded in the Istanbul Stock Exchange increased significany. Consequently, foreign investors and local investors, who make up 70% of the stock exchange, began to view Real Estate Investment Companies as priority shares to invest in. Following the important process of initial public offering, we opened the Torium shopping center, our first investment of this kind, on October 30th, 2010. Thanks to its size, varied types of stores, and the firsts it brought to the sector, Torium attracted a large number of visitors in a short time, increasing our faith in our investment even further. Parallel to the development in the Turkish economy and the real estate sector, Torunlar REIC is now focusing on a new period. In light of all these positive indicators, our objective from now on is to increase the efficiency of the projects in our portfolio, to maintain sustainable visitor and retailer interest in our shopping center investments, and to create added value in our sector with our new projects. Therefore, 2011 is an important year of investments for us. We continuously invest in new projects We continue to create added value with our prestigious projects expected to become future landmarks for Istanbul In April 2011, we started the construction and residence sales for our Mall of Istanbul project, the largest mixed use project in Turkey yet to include a shopping center, housing, office and hotel units. The project has already attracted a great deal of interest as evidenced by the preliminary sales of 220 apartments within the first three days following the opening of our sales office. We plan to start the construction of Torun Tower in Esentepe and Ali Sami Yen lot project in which Torunlar REIC has a 65% share in the 3rd quarter of 2011. Our aim is to make the Torun Tower, the Ali Sami Yen Project, and the Mall of Istanbul into new landmarks for Istanbul. Our investments outside of Istanbul also continue at full speed. Apartment sales for our Korupark Terrace project in Bursa started on April 15th, reaching 115 apartments sold within two weeks. On the other hand, Bulvar Samsun Shopping Center, a joint venture with Turkmall, and Deepo Antalya Shopping Center expansion project we plan to start in the last quarter are important projects for the retail sectors in their respective regions. With the expectation that both the national economy and the global economy will reach a state of sustainable growth, our company is determined to fortify Torunlar REIC Annual Report 2010 / 006 MESSAGE FROM THE CHAIRMAN its competitive position, while implementing its current growth and investment projects through its solid financial structure. With the completion of all these projects, we aim to see Torunlar REIC within the Istanbul Stock Exchange 30 by the year 2014. What distinguishes us from other Real Estate Investment Companies is that we have the vision and experience to successfully develop and implement mixed use projects, in addition to shopping centers, which is our main focus, and residences, offices and hotels. The five shopping centers that make up our assets have the largest shop mix in their regions. Furthermore, they possess the qualities in terms of location, architecture, and management approach that will keep them successful in the future . At Torunlar REIC, we try to further improve our operational and financial governance, investor relations and customer satisfaction. Taking solid steps towards these targets, we feel you, our esteemed shareholders and business partners, are always with us. I wholeheartedly believe that with the strength we receive from you, we will carry our growth-focused vision forward and continue to create added value for you, our social stakeholders, our industry, and ultimately, our country. I would like to note that we do not regard you as investors who want to try their luck in the stock market. By putting your trust in our company, you have become partners in our risks as well as our gains. As major shareholders and management, we are aware of the responsibility this entails. Our aim is to carry this responsibility successfully through hard work and dedication and become an exemplary Real Estate Investment Company. We believe that we will extend the confidence we have created through the concept of “solid as a rock” to our Torunlar REIC shares as well. It takes years to develop and implement large-scale investment projects such as the ones we are planning; therefore, we ask you to evaluate our company’s success not through the daily fluctuations of the stock market, but through the size and the ambition of our projects and the determination with which we bring them to life. On behalf of our board of directors, I would like to thank you for sharing this belief and our employees who are the real owners of our success. Respectfully, TORUNLAR REAL ESTATE INVESTMENT COMPANY Chairman of the Board and CEO Aziz Torun 007 CORPORATE PROFILE > Our Vision > Our Mission > Our Strategies > Our Values > Long - established history in real estate development > Proven performance in asset management > Excellent growth potential supported by strong financial assets Torunlar REIC Annual Report 2010 / 008 CORPORATE PROFILE WE ARE GROWING STEADILY For the past 50 years, our business has helped to make life more beautiful across our country with shopping centers, residences, and office buildings.